KBRA Downgrades One Rating and Affirms Three Ratings for WFCM 2014-LC16
5 Feb 2026 | New York
KBRA downgrades the rating of Class C to C (sf) from CC (sf), and affirms three ratings for WFCM 2014-LC16, a $43.3 million CMBS conduit transaction. The securitization has two specially serviced assets remaining in the underlying mortgage pool, both of which have been identified as K-LOCs with estimated losses. The rating actions follow a surveillance review of the transaction and are based on the performance and expected recoveries of the remaining two assets. Further, the transaction has exhibited an increase in realized losses and interest shortfalls since last review as the servicer works through the assets’ resolutions.
As of the January 2026 remittance period, both assets are specially serviced after failing to pay off at their respective maturity dates. One asset (64.6% of the pool balance) is REO and one (35.4%) is a non-performing matured loan. The details of the assets are outlined below.
Harlequin Plaza (largest, 64.6%, Specially Serviced, K-LOC, REO)
- The asset is a 329,926 sf, Class-B office complex located in Greenwood Village, Colorado, approximately 10 miles south of Denver. The development consists of two Energy Star certified buildings.
- KBRA maintains the asset’s K-LOC designation and KPO of Underperform based on its REO status. The loan transferred to the special servicer in May 2024 after the borrower failed to secure refinancing prior to its scheduled June 2024 maturity. The trust took title of the asset in June 2025, and has been attempting to lease up vacant space as activity in the market has been improving in recent months. Pursuant to the September 2025 rent roll, inclusive of additional leasing updates, the property was 64.9% occupied, which is down from 68.4% at last review, and 87.7% at closing. The decline in occupancy can be attributed to the lease contraction of the third largest tenant, Businesssolver.com, Inc. (11.4% of base rent, 7.5% of collateral sf), which relinquished 17,056 sf while extending its lease through February 2029. Additionally, lease rollover through YE 2026, inclusive of one MTM lease, represents 27.7% of base rent and 18.7% of collateral sf across nine total leases. As of the current review, the property was not being marketed for sale.
- The servicer-reported occupancies and DSCs are: 64.9% / 0.31x (YTD September 2025); 67.8% / 0.95x (FY 2024); at issuance these were 88.6% and 2.30x. An updated appraisal dated October 2025 valued the property at $16.3 million ($49 per sf), representing a 65.0% decline from the $46.6 million value at origination ($141 per sf). KBRA's analysis resulted in an estimated loss of $14.7 million (52.6% estimated loss severity) on the outstanding balance of $28.0 million. The estimated loss is based on a KBRA liquidation value of $14.4 million ($44 per sf), which was derived from a direct capitalization approach using a KNCF of $1.5 million and a capitalization rate of 10.50%.
Orchard Falls (2nd largest, 35.4%, Specially Serviced, K-LOC, Matured Non-Performing)
- The loan is collateralized by a 146,276 sf, Class-B office building located in Greenwood Village, Colorado, approximately 11 miles southeast of the Denver CBD.
- KBRA maintains the loan’s K-LOC designation and its KPO of Underperform based on its non-performing matured status with the special servicer after the loan failed to pay off at its scheduled May 2024 maturity date. Pursuant to the June 2025 rent roll, the property was 83.8% leased, down from 90.1% at last review and 94.0% at securitization. Lease rollover through YE 2026, inclusive of MTM leases, represents 12.7% of base rent and 9.9% of collateral sf across 12 leases, including two of the largest five leases. Cranial Technologies, Inc. (4th largest, 3.7% of base rent, 2.9% of collateral sf) and Robert J. Bess, M.D. (5th largest, 3.5%, 2.7%). The borrower reportedly filed for Chapter 11 bankruptcy in September 2025 and has filed its plan while the lender has prepared a relief from stay request. A disclosure statement hearing has been scheduled for early February 2026.
- The servicer-reported occupancies and DSCs are: 83.5% / 0.90x (YTD June 2025); N/A / 1.47x (FY 2024); at issuance these were 94.0% and 1.33x. An updated appraisal dated February 2025 valued the property at $7.6 million ($52 per sf). The most recent appraisal represents a 70.9% decline from the $26.1 million value at origination ($178 per sf). KBRA's analysis resulted in an estimated loss of $9.3 million (60.8% estimated loss severity) on the loan balance of $15.3 million. The loss is based on a KBRA liquidation value of $6.5 million ($44 per sf). The value is derived from a direct capitalization approach using a KNCF of $776,742 and a capitalization rate of 12.00%.
Details concerning the class with a rating change are as follows:
- Class C to C (sf) from CC (sf)
Details concerning the ratings affirmations are as follows:
- Class D at D (sf)
- Class E at D (sf)
- Class F at D (sf)
Rating Sensitivities
Future rating actions will be dependent upon the ongoing assessment of the timing and likelihood of ultimate payment of principal and accrued interest on the rated certificates. The assessment will consider the expected and actual losses on the remaining assets in the transaction, as well as the magnitude and extent of interest shortfalls, if any, on the certificates.
To access ratings and relevant documents, click here.
Related Publication
Methodologies
- CMBS: North American CMBS Property Evaluation Methodology
- CMBS: Methodology for Rating Interest-Only Certificates in CMBS Transactions
- CMBS: North American CMBS Single Borrower & Large Loan Rating Methodology
- Structured Finance: Global Structured Finance Counterparty Methodology
- ESG Global Rating Methodology